J. Crew’s Big Sale

Last night, Dealbook broke the story that Leonard Green & Partners and TPG Capital, two private equity firms, are buying J. Crew for about $3 billion, in cahoots with Mickey Drexler, J. Crew’s chairman and chief executive, whom I profiled a few months ago. TPG had owned J. Crew before taking it public, in 2006, and it was TPG who hired Drexler to run the place, three years earlier. In news accounts, there was talk that the deal had almost fallen apart, because Drexler was holding out for a higher price. (He owns a lot of J. Crew stock, and, despite being one of the buyers, would presumably be selling a good portion of his stake in the deal.)

In my time with him, I often heard him talk about how he felt the company was worth more than the market said it was worth, or that J. Crew’s clothes might be underpriced. Undervaluation seems to be a fixation of his, going back to his childhood, when he felt that his father was mistreated and underpaid, and the early days of his career, when he often felt underappreciated and overlooked. It isn’t entirely reckless to regard matters of finance through a psychological lens. Are these not men? As it stands, the deal has a “go-shop” provision, which leaves open the possibility that someone else may bid more for the company. I’m no financial expert, but it seems to me that, either way, Drexler makes out well.

Nick Paumgarten has been a staff writer for The New Yorker since 2005.